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Infrastructure procurement 'in crisis' as bid costs escalate

Civil engineering contractors have called for changes to procurement practices, claiming that bidding costs are becoming unsustainable.

The Civil Engineering Contractors Association (CECA) said the ‘growing use of open tenders, disproportionate quality bid requirements and poor tender documents’ is causing bid costs to escalate.

CECA called for open tenders to be used solely ‘where doing so can be demonstrated to be the most effective way of engaging suppliers’.

It said open tenders, where any company can bid for a project without going through a prequalification process, save on the administration associated with prequalification questionnaires but ‘run the risk of very large tender lists, which deters some contractors from bidding’.

CECA head of external affairs Marie-Claude Hemming said: ‘The way in which infrastructure is procured in the UK is in crisis with the costs of bidding for work challenging for the construction industry as a whole. Our research has found that the cost of tendering for a project is a significant proportion of any potential profit arising from its successful completion. This is not sustainable.

‘To this end, we have worked closely with our membership to address the challenges faced, and we want to work with our customers to eliminate the costs associated with this bureaucracy, helping to support better outcomes for everyone and help meet the Government 2025 ambitions of 33% lower cost.’

CECA has worked over the past year to look at the factors that contribute to the growing cost of procurement.

The findings of this work, which were presented at Surveyor’s ‘Successful Regional Transport 2016’ conference on 10 November, included nine key areas where contractors see the potential for savings for customers if more streamlined approaches are adopted.

They are:

Poor engagement with bidders

Too many bidders/use of open tenders

Poor tender documents

Disproportionate quality bid requirements

Frameworks that deliver less than forecasted revenue

Secondary competition in frameworks

Poor management of the procurement process

Quality of post tender feedback

Lack of enforcement of tender commitments

The full report will be published at CECA’s 20th anniversary conference later this month.